Academic journal article Social Security Bulletin

New Social Security Measures in the United Kingdom

Academic journal article Social Security Bulletin

New Social Security Measures in the United Kingdom

Article excerpt

Despite the recent lowering of public spending as a whole in the United Kingdom, 1994-95 spending levels for social security have increased to L68.8 billion (approximately US$45.9 billion), which is about 27 percent of the total budget. The increase is due to higher pensions and payments to poor people who have been hit by the new value-added tax (VAT) on fuel. Many means-tested benefits will be increased by 3.9 percent, an amount that is greater than the average pay hike. In addition, state pensions will be increased by more than the level of inflation. Health care spending has also been raised to L31.73 billion (approximately US$21.2 billion), about 1.6 percent over the rate of inflation.

On the other hand, in early December 1993, the British Government announced a number of significant changes in its social security system that will reduce outlays. The programs affected include old-age, survivors, and disability insurance (OASDI); sickness and maternity; unemployment compensation; and family allowances.

After several years of debate on how to equalize the retirement ages for men and women, the pensionable age will be 65 for both.

This decision is in compliance with the 1990 European Court ruling on equal treatment for men and women in qualifying for benefits. (See "Recent Developments in the United Kingdom," Social Security Bulletin, Vol. 56, No. 2, Summer 1993, pp. 93-94.) Currently, the retirement age for women is 60. Starting in 2010, this age will be raised to 65 over a 10-year period. The age change covers both the basic pension provided by the state and the separate State Earnings-Related Pension Scheme (SERPS). Although there had been some discussion of lowering the retirement age for men to 60, budgetary and demographic factors influenced the decision to raise the retirement age for women instead. The savings realized from this ruling is estimated to be about 4 billion (approximately US$2. …

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